Former Rep. Michael Capps loses appeal, must pay ex-employer Cybertron $200,000
Former state Rep. Michael Capps lost one court battle Friday and will have to pay a former employer $200,000 for violating an agreement not to compete with the company.
The Kansas Court of Appeals upheld a district court decision that Capps must compensate Cybertron International Inc. for trying to solicit its customers to a new business he helped a friend form and then worked for.
It’s the latest loss for the former state representative who was voted out of office in 2020 amid a scandal over a false political attack ad and who is facing a federal indictment charging that he defrauded the government on COVID-19 business-relief funds.
The case decided Friday centers on Cybertron’s 2015 purchase of a business called Integrated Technologies of Kansas, an information technology firm owned by Capps and a partner, Garland Egerton.
As part of that deal, Capps, who was president of ITK, was hired as a vice president of Cybertron and agreed not to compete with the company for five years.
In 2016, Capps’ employment with Cybertron was terminated.
“Shortly thereafter, a competitor, Century Technology Solutions (Century), which was owned by Chase Davis, acquired six of Cybertron’s customers with whom Capps had previously worked while employed at Cybertron,” the appeals court ruling said. “Capps admitted he provided ‘business coaching’ to Davis in 2016 and later became an employee of Century in 2017.”
The trial court ruled that Capps had violated his 2015 contract with Cybertron by becoming an employee of Century and soliciting IT business from two Wichita-based companies, the American Bonanza Society, an association for Beech aircraft owners, and Exhibit Arts, a marketing firm specializing in trade show services and promotional merchandise.
Sedgwick County District Court Judge Deborah Hernandez Mitchell awarded Cybertron $50,000 in damages for each of those violations and an additional $50,000 for a series of allegations related to Capps advising Davis.
The appeals court expressed some concern with the trial judge combining the multiple allegations into one additional $50,000 damage award, but let it stand.
“By helping Davis, Capps positioned one of Cybertron’s competitors to succeed in taking away Cybertron’s customers, because any successful business will compete for the greatest market share of customers seeking the types of products and services it offers,” the ruling said. “Here, Davis’ business offered substantially the same types of products and services to the same types of customers as Cybertron within relatively the same geographical market.”
Capps has declared bankruptcy, but the court handling that has ruled Capps is still responsible for the damages in the Cybertron case, the appellate ruling stated.
Cybertron has garnished Capps’ earnings, but so far only has collected about $3,000, according to the court documents.
The Appeals Court decision is the latest in a long string of court battles for the former lawmaker.
He has pending court dates in state district court and federal court in civil and criminal cases.
Capps is a defendant in a defamation lawsuit brought by Wichita Mayor Brandon Whipple that alleges Capps helped engineer a smear campaign against him and then participated in a cover-up that sought to frame former local Republican Party Chairman Dalton Glasscock for a video that falsely accused Whipple of sexual harassment during the 2019 mayoral race.
His co-defendants in that case are Michael O’Donnell, a former Sedgwick County commissioner and former Wichita City Council member James Clendenin.
Hearings in that case have been postponed until February.
Capps is also scheduled to go to trial in federal court in March tied to his receipt of nearly half a million dollars in CARES Act coronavirus relief funds. The Eagle first reported on those funds in December 2020.
In September, Capps was indicted in federal court on 19 counts of COVID-19 relief fraud and money laundering.
The federal indictment says Capps bilked federal, state and local agencies out of more than $450,000 in COVID-19 business recovery funds, claiming credit for employees who didn’t exist and inflating his payroll figures to get more federal coronavirus funding than he was eligible to receive.
The indictment says he then laundered the money through his businesses and a charity under his control: Krivacy, Midwest Business Group and Fourth and Long Foundation.
All three entities were also used in the 2019 smear campaign against Whipple.
Krivacy registered a domain name to launch the video, the video was produced in the offices of Midwest Business Group – which Capps co-owns with Clendenin – and Fourth and Long was used to anonymously funnel donations to the project.
The federal awards and money transfers were granted between May and August 2020, when Capps was still a state lawmaker.
If convicted, he potentially faces decades in prison and millions of dollars in fines.
This story was originally published January 14, 2022 at 3:06 PM with the headline "Former Rep. Michael Capps loses appeal, must pay ex-employer Cybertron $200,000."
